KBW is taking a more cautious stance on the crypto mining sector. The Wall Street investment bank downgraded Bitfarms (BITF), Bitdeer (BTDR), and HIVE Digital (HIVE) from outperform to market perform.

In a series of notes to investors published Monday, the bank signaled that while the industry's pivot toward high-performance computing (HPC) and AI hosting is compelling, the path to monetization is fraught with execution risks and long lead times.

Faced with a record-low margin environment following the 2024 halving, bitcoin miners are rebranding as digital infrastructure providers to capture a slice of the AI gold rush. By converting warm shells, facilities already equipped with high-density power and cooling, into AI-ready data centers, these firms hope to trade volatile mining rewards for stable, long-term enterprise contracts.

However, the transition is no simple pivot; the massive capital requirements and rigorous uptime standards of HPC are forcing a high-stakes divide between those who can successfully retrofit and those left holding stranded assets.

Bitfarms: The long wait for Sharon

Analyst Stephen Glagola downgraded Bitfarms to market perform, noting that while CEO Ben Gagnon has a solid vision, the market has already priced in the potential of its 120-megawatt (MW) Sharon, Pennsylvania, site.

Despite raising Bitfarms’ price target to $3.00 from $2.50, the analyst does not expect a formal leasing agreement to materialize until the second half of 2026. Furthermore, he expressed skepticism regarding Bitfarms’ potential AI cloud entry in Washington and highlighted concerns over rising leverage.

The shares were unchanged in early trading.

Bitdeer: scale vs. uncertainty

Bitdeer’s downgrade was accompanied by a significant price target cut, falling to $14 from $26.50. While KBW acknowledged Bitdeer is on track to become a leading public miner by 2026 through its vertically integrated Sealminer technology, it warned that the company’s increasing focus on AI cloud adds layers of uncertainty.

The analyst cited the business’s current small scale, concentrated shareholder control, and "related-party exposure" as key reasons to move to the sidelines.

The stock was modestly higher at $13.91.

HIVE: Lacking a "durable edge"

HIVE Digital saw its price target slashed to $3.50 from $11.00 as Glagola questioned the durability of its AI cloud strategy. The analyst noted that HIVE’s reliance on partner channels and equipment financing leaves it "sub-optimally positioned" compared to pure-play data center competitors.

Additionally, KBW flagged HIVE’s negative pre-tax ROIC, suggesting the company is scaling its mining hashrate without generating sufficient operating returns in a suppressed hashprice environment.

HIVE was 0.3% higher at $3.04 at publication time.

Across all three names, the investment bank’s message was uniform: the transition from miner to data center operator is a capital-intensive journey that may require more dilution and patience than investors currently anticipate.

Read more: Early 2026 tailwinds for bitcoin miners as hashrate falls, profitability improves: JPMorgan